Zoho founder Sridhar Vembu on Tuesday warned of a grim outlook for software jobs, citing rising artificial intelligence costs, higher server prices and geopolitical uncertainties. He said the company would work hard to avoid mass layoffs as it navigates an uncertain business environment.
In a post on X, Vembu said Zoho had not increased its employee count for the past 18 months. He also announced cuts to the company's marketing budget and said employees would not receive their usual annual pay increases this year as the company seeks to control expenses.
“We will work hard to avoid mass layoffs but the outlook for software jobs in general is grim. We have not been growing our employee count for 18 months now. Most of our employees understand the situation. I am thankful to them,” he said.
Explaining the cost pressures facing the company, Vembu said rising server prices and increasing AI usage had significantly increased expenses.
“The business outlook for software is uncertain and AI has raised costs dramatically with a) massive 4-fold increase in server prices which we need for data centers b) AI usage increasing rapidly, leading to much higher expenses, which we are trying to control,” he wrote.
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He also cited geopolitical uncertainties as an additional challenge for the business. “On top of that is the challenging geopolitical backdrop,” he noted.
As part of its cost-control measures, Zoho has reduced its marketing budget and informed employees that it would not be able to provide its usual pay increases this year. “We have cut down on our marketing budget. We have also told our employees that we cannot have our usual pay increase this year. I have apologised for not being able to avoid this,” Vembu said.
The measures reflect Zoho's cautious approach to spending and workforce expansion as it navigates rising AI-related costs and an uncertain business outlook.
Vembu said the company was undergoing a period of reinvention, with the next three to five years expected to be crucial in determining the outcome of these efforts. “We are in the middle of reinventing ourselves. The next 3-5 years will decide how our reinvention has worked. Please pray for us,” he concluded.
His remarks come amid growing discussions about AI's impact on the software industry, including operating costs, hiring decisions and rising workforce layoffs. While companies are exploring AI to improve productivity and develop new products, Vembu's comments highlight the financial pressures associated with running AI-intensive operations.
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